25 January 2014

Kenya: Nairobi-Mombasa Rail Will Cost Sh447.5 Billion

Photo: Nation
Railway line construction (file photo).

THE government yesterday maintained that the total cost for the first phase of the controversial standard gauge railway stands at Sh447.5 billion.

Treasury Secretary Henry Rotich clarified that Sh327 billion is the contracted amount signed between the Kenya Railways and the China Road and Bridge Corporation.

He said the figure covers civil works on the first phase from Mombasa to Nairobi and purchase of the locomotives.

However, Rotich did not explain the cost of phase two from Nairobi to Malaba through Kisumu. He was speaking before the National Assembly Transport Committee, chaired by Starehe MP Maina Kamanda.

Rotich said the Sh447.5 billion includes the cost of the repaying the loan whose interest rate is pegged at 2 per cent for 20 years.

"The Sh447.5 includes the cost of borrowing since there is a cost to all loans," he said.

Rotich said an additional Sh8 billion will be used in acquiring 2,253 hectares of land meant for the railway corridor.

He said Sh10.6 billion will be used in upgrading the Embakasi Inland Depot for freight handling and an additional Sh1billion to buy land for the expansion of the depot.

Rotich explained that consultancy and supervision will cost Sh3 billion. "Interest rates will be charged on the Sh327 billion as that is the concession loan the Kenya government received from the Chinese government," he said.

Asked by Kamanda whether Kenyans got value for their money in the deal, Rotich said the government looked at how other railways had been undertaken before engaging with the Chinese.

"We compared other projects and I can say that this is not wide off out of the range. We are satisfied there is value for the Kenyan people," he said. Rotich said similar projects elsewhere have ranged between US dollars 2 billion and 12 billion.

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